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Savvy investors tend to believe that mid-cap stocks should hold a significant share of a well-diversified portfolio. Generally, these companies receive less attention and coverage from financial services hubs and their analysts, which enables successful and experienced investors to find great investment opportunities in the mid-cap space. Moreover, the S&P Mid-Cap 400 Index generated an annualized return of 7.05% over the past ten-year period, greatly outperforming the return of 5.22% delivered by the S&P 500 Index over the same time span. The Insider Monkey team already discussed five stocks from our list of ten mid-cap stocks that hedge funds found the most attractive during the third quarter, so this article will reveal the remaining potential mid-cap winners favored by the smart money investors tracked by Insider Monkey.

The number of hedge fund investors that had stakes in Jarden Corp (NYSE:JAH) totaled 42 at the end of the third quarter, compared with 33 registered at the end of the previous one. Even so, the value of these hedge funds’ investments in Jarden shrank to $1.46 billion from $1.51 billion quarter-over-quarter, primarily as a result of disappointing stock performance. The shares of the consumer products company have been on a downturn since mid-August despite the fact that the company has been pursuing an aggressive growth strategy through M&A activities. At the beginning of November, analysts at RBC Capital Markets lifted their rating on the company to ‘Top pick’ from ‘Outperform’ and maintained their price target of $60 on the stock, noting that Jarden has the most attractive risk-reward profile across their coverage. Murray Stahl’s Horizon Asset Management cut its exposure to Jarden Corp (NYSE:JAH) by 45% during the July-to-September period, ending the quarter with 3.96 million shares.

-Aggregate Value of Investors’ Holdings (as of September 30): $913.53 Million

XL Group plc (NYSE:XL) also received more attention from the hedge fund industry during the third quarter, as the number of smart money investors with positions in the company climbed to 37 from 29 during the volatile three-month period. Nevertheless, the value of these positions dropped slightly quarter-over-quarter, to $913.53 million from $927.66 million. The global insurance and reinsurance company reported gross premiums written of $2.20 billion for the third quarter, which was up by 66.1% year-over-year. This increase was mainly attributable to XL’s acquisition of Catlin earlier this year. Shares of XL Group are trading at an appealing trailing price-to-earnings ratio of 10.02, which is substantially below the 23.28 ratio for the S&P 500 benchmark. Pzena Investment Management, founded by Richard S. Pzena, had 6.06 million shares of XL Group plc (NYSE:XL) in its portfolio at the end of the September quarter.

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Whether elite hedge funds collectively like a stock or not is an important metric to consider, as these large investors show a great level of skill and expertise when it comes to picking stocks. Over the last few years equity hedge funds have trailed the market by a large margin, but that’s mostly due to their hedging and short positions, which perform poorly in a bull market. Their long positions performed far better, especially their small-cap picks, which have the potential to beat the market by 95 basis points per month on average, as our backtests showed. Our small-cap strategy involves imitating a portfolio of the 15 most popular small-cap picks among hedge funds and it has returned 102% since August 2012, beating the S&P 500 ETF (SPY) by over 53 percentage points (read more details here).